Tax calculation when VAT included in price and fees with inherited VAT

Support
1

The v1.5 release notes Discourse #496 state:
“Tax configuration can now reliably be set to have prices show as tax inclusive/tax exclusive. G#788 G#773”

So I did a few tests on the Norwegian instance to test this and here are the findings (also summarizing the current status after Discourse #487)

Test conditions:

  • 1 product, price = 63.25, VAT=15%
  • 3 fees:
    Transport=10%, VAT = 25% with Tax Rate “INCLUDED IN PRICE” = false
    Admin=3%, VAT = “Inherit From Product”
    Sales=3%, VAT = “Inherit From Product”
  • 2 tests: 1) VAT on product has Tax Rate “INCLUDED IN PRICE” = true and 2) = fase

Results:

  • Test 1: “INCLUDED IN PRICE” = false. Everything is calculated as expected :slight_smile:
  • Test 2: “INCLUDED IN PRICE” = true. Not exactly what was expected :frowning:
    Results_Annoted.PNG992×686 100 KB

So I tried to understand how things are being calculated for test 2 and I found the following:

  1. The base fee is calculated from the product price including VAT instead of from the base product price
  2. The fee VAT for fees with VAT = “Inherit From Product” is simply set to 0

A new bug or nothing that was supposed to be fixed?

@danielle @oeoeaio @MyriamBoure @sstead @NickWeir

2

Thanks Olivier,

  1. @oeoeaio is the best person to confirm this (he’s out of town for 2 weeks), but I believe fees are calculated based on whatever is typed in the product master price field. This leads to an inconsistency: when config is ‘Tax Inlcuded in Price’ fees are based on the product+tax price. When the config is ‘tax NOT included in price’ the fees are based purely on the product’s price.

So for your Test 2, this is what we would expect:

Pasted image1275×529 82.1 KB

I suspect that the 25% tax rate that you have may be configured (in superadmin) to “Not Included in Price”… even in your Test 2. That may explain why it was adding its tax (1.58) on top of the $6.33 fee.

  1. Fees set to ‘inherit from product’ should have the same tax as the product the fee is applied to.This is working on our system. Your Admin and Sales fees should be inheriting and charging the %15 tax that the product has. This occurred in your Test1, if it is definitely not occuring when you have Test2 setting, you should lodge this as a bug.

Can I also ask in future that you keep examples such as the above as simple as possible. You explained it well but applying 1 fee at a time or using a product price such as $100.00 and simple fees (10%, 20%)… makes it easiest and quickest for me to comprehend. Thanks, appreciate you looking this over!